It is reported the world's largest integrated metals and mining company ArcelorMittal is reviewing the proposal of the Ukrainian steel group Donetskstal owned by Victor Nusenkis for the creation of a 50/50 joint venture for the production of coking coal on the premises of the Karagaylinskaya mine, located in Russia's Kemerovo region (Kuzbass).
In 2006, Donetskstal won the right to develop the Karagaylinskaya mine, which has a capacity of 1.5 million mt of coking coal per year, and was planning to start coal production in 2009. However, due to financing problems the startup of the mine was delayed to 2011. The project requires an investment of $150 million, and due to its debts Donetskstal is unable to develop the project alone.
On the other hand, with the increase in raw material prices, ArcelorMittal's subsidiaries in Ukraine and Kazakhstan have a critical need to expand their own coking coal reserves.
In addition, in order to increase its self-sufficiency in raw materials, ArcelorMittal is also considering buying Siberian coking-coal mines Yerunakovskaya-8 and Yubileinaya from Russian steel producer Evraz Group, Bloomberg has reported. Uralsib Financial Corp. has estimated the cost of the two Evraz mines at around $700 million.
ArcelorMittal already operates three Siberian coal mines located in the Kemerovo region, i.e., Berezovskaya, Pervomayskaya and Anzherskoye, acquired in late January 2008 from Russian steel producer Severstal for a total of $720 million. The mines are being held by ArcelorMittal's Northern Kuzbass coal company, which in 2009 produced 1.9 million mt of coking coal. In 2010, Northern Kuzbass plans to increase its coking coal output by 21 percent to 2.3 million mt. ArcelorMittal's 2010 investments in coal production in the Kemerovo region will reach Ruble 1.829 billion (about $62 million), which is almost six times more than in 2009.